THE CENTRAL Bank’s latest economic forecasts place it squarely in the middle of the pack as a consensus builds that economic recovery, while in prospect, remains some way off. The bank believes that a gradual recovery will begin late next year, but not take root until 2011. Its other forecasts, including that the economy will shrink by 8.3 per cent this year and 3 per cent next year, are also broadly in line with the consensus.
The figures, which are still being finalised, represent a small improvement over earlier projections, but the bank clearly is in no doubt about the extent of the problems – created largely by past policy mistakes – that must be surmounted to make the prospective recovery a reality.
It is unfortunate then that the outgoing governor of the Central Bank, John Hurley, should avail of his last press conference to once again try to play down the bank’s role in allowing things to come to such a sorry pass. As he has done on several occasions, most notably before a recent Oireachtas committee, Mr Hurley said he and the bank issued regular warnings that the seeds of economic destruction were being sown. The warnings, he repeated yesterday, went unheeded.
The problems with this version of history that Mr Hurley is trying to write is that it ignores the context in which the bank’s “warnings” were delivered. While a re-reading of the bank’s economic publications and public utterances over the last few years does indeed throw up the passages to which Mr Hurley is clinging to, they were never the main focus of the relevant reports, nor the main subject of the accompanying briefings. Neither were they the highlight of the subsequent media reporting of the publications.
Instead, they were buried in reports and couched in the sort of cautious and caveated prose that is the hallmark of the bank’s communication style and reflects the profoundly conservative nature of the organisation.
Yesterday’s bulletin and press conference were little different. When pressed on the European Central Bank’s interest rate policy, the governor refused to be drawn beyond comments to the effect that rates should not go up until there are clear signs that a sustainable recovery has begun.
These remarks may well, in hindsight, be capable of being interpreted as a clear warning that if ECB rates move up too quickly it could stifle what little positive momentum there is in the economy come next spring. But as they stand today, no such interpretation could be be placed on his comments. If that was what Mr Hurley meant yesterday, he didn’t say it.
Mr Hurley may well feel that these are strong words,softly spoken, but the simple fact of the matter remains that if the Central Bank really did foresee the crisis brewing in the economy, they failed abysmally to communicate it to the public. Attempts to rewrite history are understandable, but they do the bank little credit. Mr Hurley’s successor, who will be appointed shortly, would be better off concentrating on making sure the bank does not repeat its mistakes.